Tencent-backed Maoyan makes weak HK debut

Its 1.1% drop seen as warning for Chinese tech firms eyeing IPOs

HONG KONG • Tencent-backed Maoyan Entertainment, China's biggest movie ticketing platform by sales, fell 1.1 per cent in its Hong Kong stock debut yesterday, the latest in a string of weak starts among Chinese tech firms listing in the financial hub.

Shares in Maoyan opened at HK$14.82, barely higher than the initial public offering (IPO) price of HK$14.80, which was already at the bottom end of an indicative range.

They then fell to as low as HK$14, a warning sign for other Chinese tech companies that may be eyeing IPOs after achieving lofty valuations in private funding rounds. The stock closed at HK$14.64.

However, thin trading volumes in a truncated trading session on the eve of the Chinese New Year could have contributed to Maoyan's lacklustre performance, said Mr Ke Yan, co-head of research at Aequitas Research.

"While on the one hand, there's a lack of demand for the name given the limited upside in the online movie ticketing market in terms of market penetration; on the other hand, the upcoming Chinese holiday season could be another contributing factor for the thin volume and the poor performance."

Loss-making Maoyan raised US$250 million (S$338 million) in a smaller-than-expected IPO, and could raise up to US$287 million if a greenshoe, or overallotment option, is exercised within the first month of trade. That is, however, a fraction of the amount it was looking to raise last year.

Its float is being watched as a test of investor sentiment for Hong Kong deals after a patchy performance by newly listed stocks last year amid US-China trade tensions.

Maoyan's IPO already implied a "down round" for Chinese tech giant Tencent Holdings, as it valued the ticketing platform at US$2.16 billion - more than a quarter below the valuation reached in its last funding round in 2017.

Investors are bracing themselves for further down rounds in China's tech sector, as weak stock markets worldwide and the country's economic slowdown weigh on once-buoyant private markets.

Many firms such as online food delivery-to-ticketing services provider Meituan Dianping and smartphone maker Xiaomi Corp, which raised billions of dollars in their listings, are trading below their IPO prices in Hong Kong.

Maoyan offers ticketing services through its Maoyan and Gewara apps in China - the world's second-largest movie market after the United States - and mainly distributes domestic films.

Its revenue almost doubled in the first nine months of last year to 3.1 billion yuan (S$621 million), the prospectus showed. It has yet to turn in a net profit, but its loss narrowed to 144 million yuan over the same period from 152.1 million yuan a year earlier.

Bank of America Merrill Lynch and Morgan Stanley were joint sponsors for the Maoyan listing.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 05, 2019, with the headline 'Tencent-backed Maoyan makes weak HK debut'. Print Edition | Subscribe